Jobless rate rises to 9.9 percent

Unemployment hit 9.9 percent in February, the Labor and Social Affairs Ministry announced March 8.

The jobless rate is the highest since July 2004, when the current means of calculation began to be used. The jobless rate was 7.4 percent in February 2009. While the country was in a recession last year, the unemployment rate is typically an economic indicator that lags behind other indicators.

"That is a sad new record," said Vladimír Pikora, chief economist at Next Finance. "If unemployment hasn't peaked in February, it will do so in March."

The number of jobseekers grew 8,909 month on month in February. The growth for the same time period in 2009 was 31,000. One of the most dramatic illustrations of the woes on the labor market is the number of jobseekers per vacancy. As of February, there were 18.2 jobseekers per vacancy, compared with as recently as July 2008, when that number was only two, according to Miroslav Frayer, head of the economic and strategy research department at Komerční banka.

While most analysts don't expect the rate to top 10 percent, ranks of unemployed won't shrink much either for the entirety of 2010.

"Despite the fact we expect economic growth of about 1.5 percent this year, it will only lead to stabilization on the Czech labor market," Frayer said. "At the end of 2010, we expect the unemployment rate to be about 9.8 percent. Visible improvement on the labor market is expected in 2011."

The unemployment rate isn't safe from future waves of layoffs, either, Frayer cautioned, since different sectors are subject to different impulses, specifically the situation that could arise in the auto industry, one of the Czech Republic's largest sectors.

"The industrial sector has started to show signs of stabilizing, but, even so, we can't be too optimistic, as there could be a further wave of layoffs in the auto industry after the end of the car-scrap programs in countries that are our major exporters," he said. "The unfavorable situation widens with some lag to other sectors - namely services, construction and retail - and can reflect in developments on the labor market."

In a survey by the Confederation of Industry, only 15 percent of responding firms said they would hire new staff this year, and even then only in small numbers.

In a March 8 discussion hosted by the American Chamber of Commerce, guest speaker Mirek Topolánek, chairman of the Civic Democratic Party, said employment would be the most important topic on his party's agenda ahead of the May elections.

Spending on unemployment benefits more than doubled in 2009, totaling 15.08 billion Kč compared with 7.11 billion Kč in 2008, according to the Labor and Social Affairs Ministry.

Claire Compton can be reached at
ccompton@praguepost.com